Worried About the Stock Market? This High-Yielding ETF Can Provide Stability and Generate Passive Income for Decades
Investors appear to be increasingly worried about the stock market, as interest rates are on the rise, valuations are inflated, and the war in Iran doesn’t appear to be ending anytime soon, which may lead to prolonged inflation. On top of all that, there are also worries about what may happen in the midterm elections.
There are all sorts of uncertainties in the air right now, and in recent days, the S&P 500 has been declining. It finished at just under 7,700 on Monday. Although it’s still up over 12% thus far in 2026, it could have a long way to fall if those worries prompt investors to seek safer options and potentially exit the markets altogether.
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But there is a safer option than just pulling money out of the stock market. For risk-averse investors looking for a good option, the Schwab U.S. Dividend Equity ETF (NYSEMKT:SCHD) may be a solid option. Here’s why.
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The fund invests in top dividend stocks that offer great yields
Simply investing in an exchange-traded fund (ETF) is not enough for investors to reduce risk. There are thousands of ETFs, and the key is to focus on one with exposure to relatively safe, dividend-paying stocks. That can increase the odds for the fund to produce a strong return, as the dividend income it generates can pad its overall returns.
The Schwab U.S. Dividend Equity ETF is a terrific fund in this case, as it carefully vets the stocks in its portfolio to ensure it includes companies with strong fundamentals that are in better shape than their peers.
It has a broad mix of top dividend stocks in its portfolio, including Coca-Cola, UnitedHealth Group, and Chevron. Those are behemoths in their respective industries, and all are stocks that yield more than the S&P 500 average of just 1%. That’s a small sample of the quality dividend stocks investors will gain access to within this fund. There are 102 holdings in the portfolio.
The Schwab ETF can be an attractive investment to build any portfolio around
In addition to the excellent diversification the ETF offers, the Schwab fund also offers a high yield of 3.2% because it holds many top high-yielding stocks. Its management expense ratio of 0.06% also makes it among the lowest-cost funds investors can find, especially when considering the high yield it offers.
For investors, this can be a buy-and-forget investment to hold onto not only for years but potentially for decades, as it can generate a ton of dividend income and deliver solid returns along the way. This year alone, as investors have been pivoting to safer investments, it has rallied 25%, dwarfing the S&P 500’s gains.
Should you buy stock in Schwab U.S. Dividend Equity ETF right now?
Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this:
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.
Worried About the Stock Market? This High-Yielding ETF Can Provide Stability and Generate Passive Income for Decades was originally published by The Motley Fool